U2 frontman Bono has joined forces with American Express to launch the RED card. How does it stack up when compared to the Best Buys?
As I recently warned in Celebrity Big Bother (sic), one of my Golden Rules of Money Management is: "Never buy any financial product which is promoted by a celebrity".
However, I'm delighted to confirm that this rule doesn't apply to the new American Express RED credit card, which is supported by U2 frontman, philanthropist and all-round good guy Bono. The RED card, which launches on 1 March, is designed to support the Global Fund, which fights HIV/AIDS, malaria and tuberculosis around the world.
Here's how the RED card stacks up against 319 rivals in the Moneyfacts database:
Annual fee: none (includes cards for additional cardholders). This is the first tick in the box, as only fifteen of the 319 cards charge annual fees.
Donation to good cause: 1% of annual spending up to £5,000 (increasing to 1.25% above this threshold) is paid to the Global Fund. Also, a £5 activation bonus is paid if you use your RED card within one month of receiving it.
This absolutely thrashes other donation cards, as the majority pay a donation of 0.25%, with the Comic Relief card out on a limb at 0.5%. For a monthly spend of, say, £1,000, the first-year donation with a RED card would be £142.50, compared to £65.85 paid by a Comic Relief card.
However, this donation can be beaten, but only if you combine a Best Buy cashback credit card with the tax relief offered by Gift Aid (I explained how to do this here). Spending £1,000 a month on an Amex Platinum card would produce cashback of £135 in year one. Donating this sum to a registered charity using Gift Aid (note that the Global Fund isn't a UK-registered charity) would boost your gift by 28% (£37.80), turning it into £172.80. Then again, this technique is a lot more awkward than automatically doing good as you spend!
We have some cracking cashback cards for you!
Standard interest rate for purchases:12.9% APR. The average rate across all credit cards is 15.6%, and only 48 cards out of 319 (roughly one in seven) charge a lower rate of interest than the RED card does. This means that the RED card's rate beats 85% of its rivals.
For standard rates as low as 6.9% APR, check out these cards!
Normal interest-free period: 56 days. A few cards beat this with a 59-day interest-free period, but 45, 46 and 51 days are becoming increasingly common. To take full advantage of these interest-free periods and to avoid paying any interest, always pay off your entire balance by monthly Direct Debit.
Claim up to nine months' interest-free credit on purchases here!
Lifetime balance transfer rate: 5.9% for transfers within the first six months, which is only beaten by the American Express Platinum and British Airways American Express credit cards at 4.9% for life. However, please note that you shouldn't make balance transfers to any of these cards if you also intend to spend on them, as you will end up paying interest at standard rates.
We have lifetime balance transfers with rates from 4.9% in our Credit Card centre!
Other RED benefits include:
REDdeals (exclusive discounts and access to entertainment and retail events), plus REDpass (each quarter, each one lucky cardholder enjoys an adventure of a lifetime courtesy of RED.
Purchase Protection lasting for up to ninety days, plus Refund Protection if any retailer (including online retailers) to refund any covered goods within ninety days of purchase (item limit of £200) and Online Fraud Guarantee.
Travel Accident Cover of up to £50,000 if you use your RED card to pay for your trip, plus Global Assist Helpline for legal and medical referrals.
Online account access, 24-hour customer service helpline, and American Express Card Protection covering all lost or stolen cards.
So, if you're a "consumer with a conscience", this card will fit neatly into your wallet or purse, as well as satisfying your social, ethical and environmental values. Fashion-conscious shoppers will also appreciate RED card's designer look!
Although you can pre-apply for a RED card now, it won't be available until the beginning of March. In the meantime (or if you're looking for something slightly different), check out the great rates in the Fool's Credit Card centre. Here's to finding your perfect plastic!